Galaxy Digital’s Thaddeus Pinakiewicz noted that Aave is now only 10% short of recovering from the bad debt that hit its lending protocol after the Kelp DAO hack.
AAVE, the native token of the Aave DeFi platform, is now available on the Solana blockchain network. The move will give Solana users access to one of the largest lending protocols in decentralized finance without leaving the network. This came less than two days after the Solana Foundation revealed that it would deploy part of […] The post Latest $290M exploit hit DeFi so hard it forced Aave onto Solana as part of rescue efforts appeared first on CryptoSlate.
AAVE, the native token of the Aave DeFi platform, launches on Solana less than two days after the Solana Foundation committed treasury funds to support Aave's recovery from the $292 million KelpDAO rsETH exploit. The April 18 exploit exploited a LayerZero bridge vulnerability, allowing attackers to redeem unbacked rsETH as collateral across Aave, Compound, and Euler, causing WETH utilization to hit 100% and triggering $12 billion in outflows from Aave. The Solana Foundation is lending USDT to Aave as part of DeFi United, a recovery vehicle with nearly $240 million in commitments from major DeFi participants.
Circle Chief Economist Gordon Liao proposed emergency changes to Aave's lending mechanics, advocating for a 50% maximum borrowing rate to break a liquidity crunch that has trapped users' funds for five days. After users borrowed stablecoins to escape fallout from Kelp DAO's $291 million exploit, the USDC utilization rate has hovered around 100%, effectively drying up lender liquidity. Liao also proposed lowering the optimal utilization rate to 85% from 92%. Meanwhile, Lido received a proposal to contribute up to 2,500 stETH to a relief vehicle for affected Aave users.
Aave's total value locked dropped by nearly $8 billion to $18.6 billion after hackers behind the $293 million Kelp DAO exploit used stolen rsETH as collateral on Aave v3 to borrow wETH, creating approximately $195 million in bad debt. The incident triggered mass withdrawals, with MEXC exchange and Abraxas Capital removing $431 million and $392 million respectively. USDT and USDC lending pools are now at 100% utilization, locking over $5.1 billion in stablecoins. The AAVE token fell nearly 20% from $112 to $89.5, and several protocols including Curve Finance and Ethena paused LayerZero bridge usage.
